How does a single-price monopoly determine the price it will charge its customers?
What will be an ideal response?
The market demand curve is the monopolist's demand curve. The demand curve shows the maximum price at which the monopoly can sell its profit-maximizing level of output. So the monopoly finds the quantity it will produce and then uses its demand curve—the market demand curve—to determine the price it will charge.
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If investment spending increases by $1 million, then the aggregate demand curve shifts
A) rightward by less than $1 million. B) leftward by more than $1 million. C) rightward by more than $1 million. D) rightward by $1 million. E) leftward by less than $1 million.
Which of the following statements is an example of a positive, as opposed to normative, statement?
a. Americans deserve a cleaner environment. b. Reducing emissions reduces days missed from school due to asthma. c. All Americans are entitled to quality health care. d. Economic policies should focus on improving equality.
Alex is playing his music at full volume in his dorm room. The other people living on his floor are enjoying his music, but Alex does not know or care. Alex's music playing is an example of a:
A. Pareto externality. B. negative externality. C. normative externality. D. positive externality.
Which of the following is true about advertising?
A. Firms spend money on advertising in an attempt to make the demand curve more elastic. B. Advertising may be the only way that a new entrant can penetrate a market dominated by long-established firms. C. Advertising has no impact on entry costs or market structure. D. Firms consider advertising to be successful if it succeeds in lowering the long-run average cost.